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ARQ
ARQ
ARQ - Anooraq Resources Corporation - Unaudited condensed consolidated
financial statements for the three and nine months ended 30 September, 2009
Anooraq Resources Corporation
Incorporated in British Columbia, Canada
Registration number 10022-2033
TSXV/JSE share code: ARQ
AMEX share code: ANO
ISIN: CA03633E1088
("Anooraq" or the "Company" or the "Group")
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE
MONTHS ENDED 30 SEPTEMBER, 2009
(Expressed in Canadian Dollars, unless otherwise stated)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONS
Unaudited Audited
30 September 31 December
Note 2009 2008
Assets
Non-current assets
Property, plant and equipment 13 695,144,027 469,635
Mineral property interests 14 12,769,823 4,200,000
Goodwill 8 10,565,322 -
Capital work in progress 15 224,562,709 -
Investments in equity accounted investees 16 - 2,518,971
Cash deposits held in environmental trust 17 2,309,891 -
Deferred acquisition costs - 1,587,959
Total non-current assets 945,351,772 8,776,565
Current assets
Trade and other receivables 18 30,865,484 271,554
Cash and cash equivalents 19 29,688,616 3,850,674
Total current assets 60,554,100 4,122,228
Total assets 1,005,905,872 12,898,793
Equity
Share capital 20 72,346,321 54,948,341
Treasury shares (5,190,894) -
Convertible redeemable preference shares 20 162,910,000 -
Share based payment reserve 19,460,510 17,584,974
Hedge reserve 20 (180,759) -
Foreign currency translation reserve 20 (16,845,478) 129,684
Accumulated loss (97,731,555) (76,266,461)
Total equity attributable to equity holders
of the Company 134,768,145 (3,603,462)
Non-controlling interest 92,149,549 -
Total equity 226,917,694 (3,603,462)
Liabilities
Non-current liabilities
Loans and borrowings 21 522,826,795 12,967,753
Financial liabilities 995,344 -
Commitment fee liability 218,356 -
Provisions 22 4,219,526 -
Deferred taxation 11 215,887,904 -
Total non-current liabilities 744,147,925 12,967,753
Current liabilities
Trade and other payables 23 34,722,121 1,798,839
Loans and borrowings 21 - 1,735,663
Tax payable 118,132 -
Total current liabilities 34,840,253 3,534,502
Total liabilities 778,988,178 16,502,255
Total equity and liabilities 1,005,905,872 12,898,793
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Nine months ended
Unaudited Unaudited
30 September 30 September
Note 2009 2008
Revenue 9 27,805,577 -
Cost of sales (34,595,797) -
Operating Loss (6,790,220) -
Depreciation and amortisation (5,987,468) (32,138)
Administrative expenses (8,838 ,747) (10,018,538)
Transaction costs 8 (7,498,775) -
Other income 3,989,788 5,894
Loss before finance expense and tax (25,125,422) (10,044,782)
Finance income 449,369 147,461
Finance expense 10 (9,985,062) (1,401,597)
Net finance expense (9,535,693) (1,254,136)
Share of loss of equity accounted investees (212,423) (163,702)
(net of income tax)
Loss before income tax (34,873,538) (11,462,620)
Income tax 11 5,495,022 -
- -
Loss for the period (29,378,516) (11,462,620)
Other comprehensive (loss)/income
Foreign currency translation differences (21,592,220) 441,841
for foreign operations
Effective portion of changes in fair value (180,759) -
of cash flow hedges
Other comprehensive (loss) / income for the (21,772,979) 441,841
period, net of income tax
Total comprehensive loss for the period (51,151,495) (11,020,779)
Loss attributable to:
Owners of the Company (21,465,095) (11,462,620)
Non-controlling interest (7,913,421) -
Loss for the period (29,378,516) (11,462,620)
Total comprehensive (loss) / income
attributable to:
Owners of the Company (38,621,016) (11,020,779)
Non-controlling interest (12,530,479) -
Total comprehensive loss for the period (51,151,495) (11,020,779)
Earnings per share
Basic and diluted loss per share 12 (0.16) (0.06)
Headline loss per share (0.10) (0.06)
Diluted headline earnings / (loss) per (0.10) (0.06)
share
Weighted average number of ordinary shares
outstanding 189,286,554 185,485,041
Fully diluted average number of ordinary
shares outstanding 245,980,800 185,485,041
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (CONTINUED)
Three months ended Year ended
Unaudited Unaudited Audited
Note 30 September 30 September 31 December
2009 2008 2008
Revenue 9 27,805,577 - -
Cost of sales (34,595,797) - -
Operating Loss (6,790,220) - -
Depreciation and amortisation (5,927,746) (14,020) (61,140)
Administrative expenses (2,913,138) (1,732,253) (12,010,258)
Transaction costs 8 (276,638) - -
Other income 3,963,481 158 5,779
Loss before finance expense (11,944,261) (1,746,115) (12,065,619)
and tax
Finance income 380,775 12,002 179,119
Finance expense 10 (8,793,750) (495,104) (1,848,574)
Net finance expense (8,412,975) (483,102) (1,669,455)
Share of loss of equity - (59,285) (235,022)
accounted investees (net of
income tax)
Loss before income tax (20,357,236) (2,288,502) (13,970,096)
Income tax 11 5,495,022 - -
- - -
Loss for the period (14,862,214) (2,288,502) (13,970,096)
Other comprehensive
(loss)/income
Foreign currency translation (10,138,564) 197,024 129,684
differences for foreign
operations
Effective portion of changes (180,759) - -
in fair value of cash flow
hedges
Other comprehensive (loss) / (10,319,323) 197,024 129,684
income for the period, net of
income tax
Total comprehensive loss for (25,181,537) (2,091,478) (13,840,412)
the period
Loss attributable to:
Owners of the Company (6,948,793) (2,288,502) (13,970,096)
Non-controlling interest (7,913,421) - -
Loss for the period (14,862,214) (2,288,502) (13,970,096)
Total comprehensive (loss) /
income attributable to:
Owners of the Company (12,651,058) (2,091,478) (13,840,412)
Non-controlling interest (12,530,479) - -
Total comprehensive loss for (25,181,537) (2,091,478) (13,840,412)
the period
Earnings per share
Basic and diluted loss per 12 (0.08) (0.01) (0.08)
share
Headline loss per share (0.03) (0.01) (0.07)
Diluted headline earnings /
(loss) per share (0.03) (0.01) (0.07)
Weighted average number of
ordinary shares outstanding 189,286,554 185,485,041 185,775,361
Fully diluted average number
of ordinary shares
outstanding 245,980,800 185,485,041 185,775,361
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Treasury shares
Number of Amount Number of Amount
shares shares
For the nine months ended
30 September 2008
Balance at 1 January 2008 185,208,607 51,855,350 - -
Total comprehensive income
for the period
Loss for the period - - - -
Other comprehensive income
Foreign currency - - - -
translation differences
Total other comprehensive - - - -
income
Total comprehensive income - - - -
for the period
Transactions with owners, - - - -
recorded directly in equity
Contributions by and
distributions to owners
Fair value of stock options - 1,055,432 - -
allocated to share issued
on exercise
Share-based payment 1,431,400 2,037,558 - -
transactions
Total contributions by and 1,431,400 3,092,990 - -
distributions to owners
Balance at 30 September 186,640,007 54,948,340 - -
2008
For the nine months ended
30 September 2009
Balance at 1 January 2009 186,640,007 54,948,340 - -
Arising from business - - - -
acquisition
Total comprehensive - - - -
(loss)income for the period
Loss for the period - - - -
Other comprehensive
(loss)/income
Foreign currency - - - -
translation differences
Effective portion of - - - -
changes in fair value of
cash flow hedges, net of
tax
Total other comprehensive - - - -
loss
Total comprehensive - - - -
(loss/)income for the
period
Transactions with owners,
recorded directly in equity
Contributions by and
distributions to owners
Ordinary shares issued 14,296,567 16,502,324 (4,497,062) (5,190,894)
Preference shares issued - - - -
Share options repriced - - - -
Share-based payment 806,898 895,657 - -
transactions
Total contributions by and 15,103,465 17,397,981 (4,497,062) (5,190,894)
distributions to owners
Balance at 30 September 201,743,472 72,346,321 (4,497,062) (5,190,894)
2009
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Convertible
redeemable Share based
preference Translation payment Hedge
shares reserve reserve reserve
For the nine months ended
30 September 2008
Balance at 1 January 2008 13,254,905 -
Total comprehensive income
for the period
Loss for the period - - - -
Other comprehensive income
Foreign currency
translation differences - 441,841 - -
Total other comprehensive 441,841
income - - -
Total comprehensive income 441,841
for the period - - -
Transactions with owners,
recorded directly in - - - -
equity
Contributions by and
distributions to owners
Fair value of stock
options allocated to share - (1,055,432) -
issued on exercise
Share-based payment
transactions 5,311,104 -
Total contributions by and
distributions to owners 4,255,672 -
Balance at 30 September
2008 441,841 17,510,577
For the nine months ended
30 September 2009
Balance at 1 January 2009 129,684 17,584,974 -
Arising from business
acquisition - - - -
Total comprehensive
(loss)income for the - - - -
period
Loss for the period - - - -
Other comprehensive
(loss)/income
Foreign currency
translation differences - (16,975,162) - -
Effective portion of -
changes in fair value of - - -
cash flow hedges, net of
tax
Total other comprehensive (16,975,162)
loss - - (180,759)
Total comprehensive
(loss/)income for the (16,975,162) (180,759)
period - -
Transactions with owners,
recorded directly in (16,975,162) (180,759)
equity
Contributions by and
distributions to owners
Ordinary shares issued
Preference shares issued 162,910,000 - 758,095 -
Share options repriced - - - -
Share-based payment
transactions - - 1,117,441 -
Total contributions by and 1,875,536 -
distributions to owners 162,910,000 -
Balance at 30 September
2009 162,910,000 (16,845,478) 19,460,510 (180,756)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Non-
Accumulated controlling
loss Total interest Total equity
For the nine months
ended 30 September 2008
Balance at 1 January 2,910,262 2,910,262
2008 (62,199,993) -
Total comprehensive
income for the period
Loss for the period (11,462,620) (11,462,620) - (11,462,620)
Other comprehensive
income
Foreign currency
translation differences - 441,841 - 441,841
Total other 441,841 441,841
comprehensive income - -
Total comprehensive (11,020,779) (11,020,779)
income for the period (11,462,620) -
Transactions with
owners, recorded
directly in equity - - - -
Contributions by and
distributions to owners
Fair value of stock
options allocated to
share issued on - - - -
exercise
Share-based payment
transactions - 7,348,662 - 7,348,662
Total contributions by - 7,348,662 - 7,348,662
and distributions to
owners
Balance at 30 September (761,855) - (761,855)
2008 (73,662,613)
For the nine months
ended 30 September 2009
Balance at 1 January (76,266,460) (3,603,462)
2009 (3,603,462) -
Arising from business 104,680,028
acquisition - - 104,680,028
Total comprehensive
(loss)income for the
period - - - -
Loss for the period (21,465,095) (21,465,095) (7,913,421) (29,378,516)
Other comprehensive
(loss)/income
Foreign currency
translation differences - (16,975,162) (4,617,058) (21,592,220)
Effective portion of
changes in fair value
of cash flow hedges,
net of tax - (180,759) - (180,759)
Total other (17,155,921) (4,617,058) (21,772,979)
comprehensive loss -
Total comprehensive
(loss/)income for the
period (21,465,095) (38,621,016) (12,530,479) (51,151,495)
Transactions with
owners, recorded
directly in equity
Contributions by and
distributions to owners
Ordinary shares issued - 12,069,525 - 12,069,525
Preference shares - 162,910,000 - 162,910,000
issued
Share options repriced - 1,117,441 - 1,117,441
Share-based payment
transactions - 895,657 - 895,657
Total contributions by
and distributions to
owners - 176,992,623 - 176,992,623
Balance at 30 September 226,917,694
2009 (97,731,555) 134,768,145 92,149,549
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Nine months ended Year ended
Note Unaudited Unaudited Audited
30 September 30 September 31 December
2009 2008 2008
Operating activities
Cash flows from operating (29,378,516) (11,462,620) (13,970,096)
activities
Loss for the period
Adjustments for:
Depreciation and amortisation 5,987,468 32,138 61,140
Finance expense 9,985,062 1,300,884 1,848,416
Profit on sale of assets - (5,894) (5,779)
Unrealised foreign exchange (156,592) (337,868) (265,050)
loss / (gain)
Share of profit of equity 212,423 163,702 310,130
accounted investees, net of
tax
Equity-settled share-based 1,875,536 5,311,104 5,385,472
payment transactions
Ordinary shares issued as 895,657 - -
compensation
Deferred tax (5,495,022) - -
(16,073,984) (4,998,554) (6,635,767)
Change in trade and other (4,626,235) 98,778 746,098
receivables
Change in trade and other (228,396) 435,763 529,665
payables
(20,928,615) (4,464,013) (5,360,004)
Financing costs paid - (1,764,651) -
Net cash used in operating (20,928,615) (6,228,664) (5,360,004)
activities
Acquisition of property, 8 (1,829) (452,804) (473,642)
plant and equipment
Acquisition of Bokoni 8 (119,956,365) - -
Platinum Mine (Pty) Ltd
Contributions received from 8 6,741,102 - -
Anglo Platinum relating to
ESOP trust
Acquisition of cash in 3,576,912 - -
business combination
Proceeds from the sale of 15 - 23,832 54,140
assets
Capital work-in- progress 8 (10,370,098) - -
Additions to mineral property (6,592,523) - -
interest
Deferred acquisition costs (11,824,920) (1,154,461) (1,219,813)
previously capitalised now
expensed
Net cash used in investing (138,427,721) (1,583,433) (1,639,315)
activities
Proceeds from the issue of 21 2,037,558 5,667,587
share capital
Proceeds from the issue of A 21 177,720,000 - -
preference shares
Redemption of "A" preference (1,066,320) - -
shares
Proceeds from the issue of 162,910,000 - -
convertible "B" preference
shares
Loans raised from Rustenburg 21 29,531,388 - -
Platinum Mines Limited
Loan received from Standard 8 74,050,000 - -
Chartered Bank
Repayment of loans and 21 (251,770,000) - -
borrowings to RPM at
acquisition
Repayment of bridging loan to 12 (18,079,846) - (1,747,324)
Rustenburg Platinum Mines
Limited
Net cash from financing 173,295,222 2,037,558 3,920,263
activities
Net increase in cash and cash 13,938,886 (5,774,539) (3,079,056)
equivalents
Effect of exchange rate 11,898,966 (136,716) (202,091)
fluctuations on cash held
Cash flows from investing 3,850,764 7,131,821 7,131,821
activities
Cash and cash equivalents at $29,688,616 1,220,566 3,850,674
30 September 2009
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (CONTINUED)
Three months ended
Note Unaudited Unaudited
30 September 30 September
2009 2008
Operating activities
Cash flows from operating activities (14,862,214) (2,288,502)
Loss for the period
Adjustments for:
Depreciation and amortisation 5,927,746 14,020
Finance expense 8,793,750 394,391
Profit on sale of assets - (5,894)
Unrealised foreign exchange loss / (gain) (170,257) (266,726)
Share of profit of equity accounted - 59,285
investees, net of tax
Equity-settled share-based payment - 78,411
transactions
Ordinary shares issued as compensation - -
Deferred tax (5,495,022) -
(5,805,997) (2,015,015)
Change in trade and other receivables (4,539,384) 195,911
Change in trade and other payables (11,733,233) 317,517
(22,078,614) (1,501,587)
Financing costs paid - (7,997)
Net cash used in operating activities (22,078,614) (1,509,584)
Acquisition of property, plant and 8 - (114,131)
equipment
Acquisition of Bokoni Platinum Mine (Pty) 8 (119,956,365) -
Ltd
Contributions received from Anglo Platinum 8 6,741,102 -
relating to ESOP trust
Acquisition of cash in business combination 3,576,912 -
Proceeds from the sale of assets 15 - 108
Capital work-in- progress 8 (10,370,098) -
Additions to mineral property interest (6,592,523) -
Deferred acquisition costs previously - (191,658)
capitalised now expensed
Net cash used in investing activities (126,600,972) (305,681)
Proceeds from the issue of share capital 21 1,470,000
Proceeds from the issue of A preference 21 177,720,000 -
shares
Redemption of "A" preference shares (1,066,320) -
Proceeds from the issue of convertible "B" 162,910,000 -
preference shares
Loans raised from Rustenburg Platinum Mines 21 29,531,388 -
Limited
Loan received from Standard Chartered Bank 8 74,050,000 -
Repayment of loans and borrowings to RPM at 21 (251,770,000) -
acquisition
Repayment of bridging loan to Rustenburg 12 (18,079,846) -
Platinum Mines Limited
Net cash from financing activities 173,295,222 1,470,000
Net increase in cash and cash equivalents 24,615,636 (345,265)
Effect of exchange rate fluctuations on 4,621,379 425,472
cash held
Cash flows from investing activities 451,601 1,140,359
Cash and cash equivalents at 30 September 29,688,616 1,220,566
2009
The accompanying notes are an integral part of these condensed consolidated
financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NATURE OF OPERATIONS
Anooraq is incorporated in the Province of British Columbia, Canada. The
condensed consolidated financial statements of the Group as at and for the
three and nine months to 30 September 2009 comprise the Company and its
subsidiaries (together referred to as the "Group" and individually as "Group
entities") and the Group`s interest in associates and jointly controlled
entities. Its principal business activity is the mining and exploration of
Platinum Group Metals ("PGM") through its mineral property interests. The
Company focuses on mineral property interests located in the Republic of
South Africa in the Bushveld Complex. Anooraq operates in South Africa
through its wholly owned subsidiary Plateau Resources (Proprietary) Limited
("Plateau") which historically owned the Group`s various mineral property
interests and conducted the Group`s business in South Africa.
The condensed consolidated financial statements include the results of the
Group`s acquisition of an effective 51% of the Lebowa Platinum Mine, now
known as Bokoni Platinum Mines (Proprietary) Limited ("Bokoni") and control
of the advanced stage Ga-Phasha Project ("Ga-Phasha Project"), the
Boikgantsho Project ("Boikgantsho Project") and the early stage Kwanda
Project ("Kwanda Project") by acquiring an additional 1% of these projects
for an aggregate cash consideration of $385 million (South African Rands
("ZAR") 2.6 billion) as from 1 July 2009 (refer note 8).
The controlling interest was affected through Plateau acquiring 51% of the
shareholding of Bokoni Platinum Holdings (Proprietary) Limited ("Bokoni
Holdco") on 1 July 2009. Bokoni Holdco, a private company incorporated under
the laws of South Africa, is the holding company through which Anooraq and
Anglo Platinum Limited ("Anglo Platinum") hold their interests in Bokoni and
the various exploration project companies.
2.GOING CONCERN
The condensed consolidated financial statements are prepared on the basis
that the Group will continue as a going concern which contemplates the
realization of assets and settlement of liabilities in the normal course of
operations as they become due.
Anooraq completed the acquisition of an operating mine (refer note 8), which
resulted in immediate cash flows from operations. The Group secured various
funding arrangements (refer note 21) in order to meet the purchase
consideration and to fund its planned business objectives. The funding
agreements include securing a long term credit facility, the Operating
Cashflow Shortfall Facility ("OCSF"), with Rustenburg Platinum Mines Limited
("RPM") for an amount of $218 million (ZAR 1.5 billion). The facility will be
used to fund Plateau`s share of operating cash and capital requirements for
an initial period of three years. As at 30 September 2009, the Group utilised
$29.5 million (ZAR 219.4 million) thereof to fund operating requirements at
Bokoni as the mining operations are not currently generating sufficient cash
flows to fund operations.
As a result of securing the financial resources and long term funding,
management expects that cash flows from the acquired mining operations and
the additional financing secured will be sufficient to meet immediate ongoing
operating cash requirements.
3.BASIS OF PRESENTATION
STATEMENT OF COMPLIANCE
These condensed consolidated financial statements have been prepared in
accordance with IAS 34, Interim Financial Reporting, and do not include all
the information required for full annual financial statements in accordance
with International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB") and interpretations of
those standards.
The Company received approval from the Canadian Securities Administrators
under National Instrument 52-107, Acceptable Accounting Principles, Auditing
Standards and Reporting Currency ("NI 52-107") to early adopt IFRS as from 1
January 2009. The Group`s transition date for converting to IFRS was 1
January 2008 (the "Transition Date") and the comparative statement of
financial position as at 31 December 2008, comparative statements of
comprehensive loss for three and nine months ended 30 September 2008 and for
the year ended 31 December 2008, comparative statements of changes in equity
and statements of cash flows for the three and nine months ended 30 September
2008 and for the year ended 31 December 2008 have been restated in accordance
with IFRS.
The guidance for the first time adoption of IFRS is set out in IFRS 1, First
Time Adoption of International Financial Reporting Standards. IFRS 1 provides
for certain mandatory exceptions and optional exemptions for first time
adopters of IFRS. The Group elected to take the following IFRS 1 optional
exemptions:
- to apply the requirements of IFRS 3, Business Combinations, prospectively
from the Transition date;
- to apply the requirements of IFRS 2, Share-based payments, only to equity
instruments granted after 7 November 2002 which had not vested as of the
Transition Date; and
- to transfer all foreign currency translation differences, recognised as a
separate component of equity, to accumulated loss as at the Transition Date
including those foreign currency differences which arise on adoption of IFRS.
Reconciliations between the Groups` previously reported statement of
financial position and the statements of comprehensive loss under Canadian
generally accepted accounting principles ("GAAP") and those reported under
IFRS are presented in note 26.
BASIS OF MEASUREMENT
The condensed consolidated financial statements have been prepared on the
historical cost basis as set out in the accounting policies below. Certain
items, including derivative financial instruments, are stated at fair value.
USE OF ESTIMATES AND JUDGEMENTS
The preparation of the condensed consolidated financial statements in
accordance with IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
These condensed consolidated financial statements have been prepared on the
basis of IFRS standards that are expected to be effective or available for
early adoption by the Group on 31 December 2009, the Group`s first annual
reporting date under IFRS. The Group has made certain assumptions about the
accounting policies expected to be adopted when the first IFRS annual
financial statements are prepared for the year ended 31 December 2009. The
preparation of these condensed consolidated financial statements resulted in
changes to the accounting policies as compared with the most recent annual
financial statements prepared under GAAP. The accounting policies set out
below have been applied consistently to all periods presented in these
financial statements. They also have been applied in preparing an opening
IFRS balance sheet at 1 January 2008, as required by IFRS 1. The impact of
the transition from GAAP to IFRS is explained in note 26.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
Information about critical judgements in applying accounting policies that
have the most significant effect on the amounts recognised in the
consolidated financial statements is included in the notes to the financial
statements where applicable.
CHANGES IN ACCOUNTING POLICIES
Overview
The Group changed its accounting policies as from 1 January 2009 in the
following areas:
-Accounting for business combinations
-Presentation of financial statements
-Accounting for borrowing costs
ACCOUNTING FOR BUSINESS COMBINATIONS
As a result of the acquisition discussed in note 8, the Group early adopted
IFRS 3 Business Combinations (2008) and IAS 27 Consolidated and Separate
Financial Statements (2008) for all business combinations occurring in the
financial year commencing 1 January 2009. All business combinations occurring
on or after 1 January 2009 are accounted for by applying the acquisition
method. The change in accounting policy is applied prospectively. As a result
of the change in accounting policy, transaction costs amounting to $7.5
million were recognised in profit and loss for the nine months ended 30
September 2009.
The Group applied the acquisition method for the business combination as
disclosed in note 8.
Control is the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. In assessing control,
consideration is given to potential voting rights that are currently
exercisable. The acquisition date is the date on which control is transferred
to the acquirer. Judgement is applied in determining the acquisition date and
determining whether control is transferred from one party to another.
Goodwill is measured as the fair value of the consideration transferred
including the recognised amount of any non-controlling interest in the
acquiree, less the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed, all measured at the
acquisition date. To the extent that the fair value exceeds the consideration
transferred, the excess is recognised in the statement of comprehensive
income.
Consideration transferred includes the fair values of the assets transferred,
liabilities incurred by the Group to the previous owners of the acquiree, and
equity interests issued by the Group. Consideration transferred also includes
the fair value of any contingent consideration and share-based payment awards
of the acquiree that are replaced mandatorily in the business combination.
A contingent liability of the acquiree is assumed in a business combination
only if such a liability represents a present obligation and arises from a
past event, and its fair value can be measured reliably.
Non-controlling interest is measured at its proportionate interest in the
identifiable net assets of the acquiree.
Transaction costs incurred in connection with a business combination, such as
legal fees, due diligence fees, and other professional and consulting fees
are expensed as incurred, unless it is debt related. Transaction costs
related to debt instruments are capitalised.
If the Group obtains control over one or more entities that are not
businesses, then the bringing together of those entities are not business
combinations. The cost of acquisition is allocated among the individual
identifiable assets and liabilities of such entities, based on their relative
fair values at the date of acquisition. Such transactions do not give rise to
goodwill and no non-controlling interest is recognised.
The change in accounting policy is applied prospectively.
The impact of the change in accounting policy has been recorded in the
quarter ended 30 September 2009. The effect on profit and loss on the
quarters of the 2009 financial year previously reported would have been as
follows:
Three months Three months
ended 30 June ended 31 March
2009 2009
Loss as previously reported 9,174,118 2,107,384
Transaction costs expensed 5,551,586 1,670,551
Loss, as restated 14,725,704 3,777,935
Loss per share, as restated (0.08) (0.02)
PRESENTATION OF FINANCIAL STATEMENTS
The condensed consolidated financial statements have been prepared by
applying the revised IAS 1 Presentation of Financial Statements (2007), which
became effective as of 1 January 2009. As a result, the consolidated
statement of changes in equity presents all owner changes in equity, whereas
all non-owner changes in equity are presented in the consolidated statement
of comprehensive income. This presentation has been applied in these
condensed consolidated financial statements.
Comparative information has been changed so that it is in conformity with the
revised standard. Since the change in accounting policy only impacts
presentation aspects, there is no impact on loss per share.
ACCOUNTING FOR BORROWING COSTS
In respect of borrowing costs relating to qualifying assets for which the
commencement date for capitalisation is on or after 1 January 2009, the Group
capitalises borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset as part of the
cost of that asset. Previously the Group immediately recognised all borrowing
costs as an expense. This change in accounting policy was due to the
prospective adoption of IAS 23 Borrowing Costs (2007) in accordance with the
transitional provisions of such standard; comparative figures have not been
restated. The change in accounting policy resulted in the capitalisation of
borrowing costs of $6.9 million in the period ended 30 September 2009. The
change in accounting policy did not impact previously reported quarters of
the 2009 financial year.
4.SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all
periods presented in these condensed consolidated financial statements, and
have been applied consistently by Group entities, except as explained in note
3, which addresses changes in accounting policies.
Certain comparative amounts have been reclassified to conform to the current
period`s presentation.
(a) BASIS OF CONSOLIDATION
BUSINESS COMBINATIONS
The Group changed its accounting policy with respect to accounting for
business combinations. Refer note 3 for further details.
SUBSIDIARIES
Subsidiaries are entities controlled by the Group. The financial statements
of subsidiaries are included in the condensed consolidated financial
statements from the date that control commences until the date that control
ceases. The accounting policies of subsidiaries have been changed when
necessary to align them with the policies adopted by the Group.
SPECIAL PURPOSE ENTITIES
A Special Purpose Entity ("SPE") is consolidated if, based on an evaluation
of the substance of its relationship with the Group and the SPE`s risks and
rewards, the Group concludes that it controls the SPE. SPEs` controlled by
the Group were established under terms that impose strict limitations on the
decision-making powers of the SPEs` management and that result in the Group
receiving the majority of the benefits related to the SPEs` operations and
net assets, being exposed to the majority of risks incident to the SPEs`
activities, and retaining the majority of the residual or ownership risks
related to the SPEs` or their assets.
INVESTMENTS IN JOINTLY CONTROLLED ENTITIES (EQUITY ACCOUNTED INVESTEES)
Joint ventures are those entities over whose activities the Group has joint
control, established by contractual agreement and requiring unanimous consent
for strategic financial and operating decisions.
Investments in jointly controlled entities are accounted for using the equity
method (equity accounted investees) and are recognised initially at cost. The
Group`s equity investment includes goodwill identified on acquisition, net of
any accumulated impairment losses.
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